Europe extends antidumping

In early October, the European Commission's trade directorate issued a document proposing to extend the anti-dumping duties on leather shoes from China and Vietnam for another 15 months, in the hope that the global crisis will end and the European footwear industry will have time to adapt to the new economic conditions.

Thus, the anti-dumping duties introduced in October 2006 of 16,5% on shoes from China and Macau (excluding Golden Step products - 9,7%) and 10% on shoes from Vietnam remain in effect and apply to the same products. , as before, that is, for all leather shoes, including children, except for sports and special work shoes.

Preliminary recommendations drawn up by the European Trade Commissioner - Baroness Catherine Ashton - based on the results of a lengthy and thorough investigation, were sent out to all interested parties. In November, a new Commission will be convened to continue work on this issue.

In any case, the final decision must be made by the governments of all 27 EU member states by the end of this year. Apparently, 15 of the 27 countries will vote against fees, either at the level of the European Commission or during the final vote in the Council of Ministers. However, political deals can greatly change this balance of power.

In the course of the "anti-dumping investigation", the Commission examined the activities of 8 European companies, which account for approximately 8% of European footwear production. At the same time, one of 8 companies gradually curtailed the production of footwear in Europe during the investigation. The names of the companies are classified as they fear negative customer reactions. According to the Commission, 5 national footwear associations are in favor of extending the duties, while 4 are against.

In addition to eight European firms, 50 Chinese and 51 Vietnamese companies were involved in the investigation. The activities of seven Chinese companies, including the large Yue Yuen group, and three Vietnamese companies were carefully analyzed. The activities of the 21 importer were also considered; 7 of these have been studied in depth - Adidas, Clarks, Nike, Puma, Timberland, Achten Beheer and Footex International of the Netherlands.

To establish the fact of dumping, the Commission analyzed three Brazilian firms - Heinrich & Cie, Werner and the West Coast, since Brazil was recognized as a country with a market economy similar to that of South East Asia. In addition, after December 8, the Commission sent out questionnaires to Indian and Indonesian manufacturers. The responses came from one Indian company and five Indonesian ones; however, their products were found to be incompletely compliant with Chinese and Vietnamese.

In response to protests by opponents of fees, the Commission provided detailed arguments for choosing Brazil as a country for comparison and stated that dumping could have been proven even if Indonesia were the country.

The published document emphasizes that in the event of cancellation of duties, dumping by China and Vietnam will continue due to the huge reserve capacity of these countries and the attractiveness of the European market. At the same time, the transfer of production to India does not pose a serious threat to European industry, since the average export price of Indian shoes is by 25% higher than Vietnamese and by 38% Chinese.

The investigation showed that during the period from 2006 to 2008, price dumping by Chinese manufacturers increased from 13,5 to 31,9%, and from the Vietnamese side - from 15,9 to 38,9%. Import of leather shoes from these countries decreased, while from others it increased. If we exclude the effect of anti-dumping duties, then the import prices for Chinese and Vietnamese shoes decreased slightly.

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During the same time, from 2006 to 2008, European footwear production decreased by 6% to 365,6 million pairs, and capacity utilization decreased from 71 to 66%. Total shoe consumption fell by 7%. Employment in the shoe industry remains stable at the level of 260 000 people; while in import and subsequent resale of shoes from China and Vietnam about 23 000 people are involved. These figures are seen as evidence of the effectiveness of anti-dumping duties that have stopped the rampant increase in shoe imports.

Prices for shoes increased by 30%, mainly as a result of rising prices for raw materials and the expansion of an expensive segment of the market. Profit in the shoe industry increased from 1,3 to 3%, but is still far from the target of 6%. This suggests that the situation remains unstable and the industry has not yet managed to fully recover from the damage caused by dumping. Moreover, the current global crisis may increase the negative effect of dumping.

In the period from 2006 to 2008, the average profit of importers before taxes decreased from 22,2 to 19,4%. The relatively high level of profit is partly due to the depreciation of the dollar. While the profitability of imports of own brands decreased, the profitability of imports of branded shoes went up.

In deciding to extend fees, the Commission took into account the views of some retailers and consumer associations. Despite the fact that none of the major retail chains, except Clarks, expressed a desire to participate in the investigation, the Commission found that the introduction of anti-dumping duties did not significantly increase retail prices in stores. Two of the three national consumer associations expressed support for anti-dumping measures; and the Commission suggests that the extension of fees will increase retail prices by no more than 2%.

In its draft extension of fees, the Commission states that the 14% decrease in sales of leather shoes over the past two years and the corresponding increase in sales of textile shoes are mainly due to changes in fashion, rather than a narrowing of the range of leather products. However, not everyone agreed with this statement, as many importers admitted that they reduced the production of leather shoes in favor of shoes made of textiles and artificial leather to maintain retail prices at the same level.

Brazil and Canada solve dumping in their own way

Canada and Brazil, in their own way, protect their producers from Chinese dumping. More recently, the Canadian International Trade Court ruled that anti-dumping duties on Chinese and Vietnamese waterproof shoes are unnecessary, as these products do not harm the Canadian industry and do not create unfair competition in the market.

At the same time, right before the start of the September GDS exhibition in Dusseldorf, the Brazilian Foreign Trade Commission (Camex) decided to introduce a special fee of $ 12,47 for each pair of shoes imported from China, starting on September 9 and for 6 months. The Brazilian Shoe Manufacturers Association (Abicalcados) initially requested that this fee be set at $ 18,44 per pair, but the Commission’s final decision was influenced by strong lobbying by Adidas and other major importers.

Under the new duty, both leather and textile shoes, as well as shoes made of artificial and exotic leather, are included. This means that 99,5% of all shoes imported from China will be taxed. The new duty applies to all sports shoes, but does not apply to ski boots, special medical shoes, special shoes, sandals and children's shoes made on 100% of fabric.

Camex compared Chinese prices with Italian prices to establish the fact of dumping. Italian manufacturers, in turn, have actively cooperated with the Commission, in the hope that following the introduction of anti-dumping duties, the Brazilian government will reduce the usual import duties, which were raised from 20 to 35% in January 2008. Italians also hope that the Chinese authorities will open up the domestic market more widely to imports of footwear as a political gesture to prevent the introduction of new duties on Chinese footwear elsewhere in the world.